DUTCH 30%-RULING TAX FACILITY

The 30%-ruling is a tax advantage, created for employees who are posted or recruited from abroad, to work in the Netherlands. The purpose of this advantage is to cover all the various costs they incur, as a result of moving their lives oversees to. This can be a real blessing to expats! In order to be eligible to benefit from the 30% ruling yourself, there are several conditions that you must satisfy. These pertain to matters like: the reason you came to the Netherlands for work, your application for the 30% ruling and where you were working before you began your job in NL. To complicate matters further, these stipulations are due to change in the coming year.
On this page, we have outlined the current conditions with which you must comply, and given you a forecast for their upcoming amendments. You can also find information on how you can prevent yourself from losing money if, for some reason, you do not qualify for the 30% ruling.

The Dutch 30% Ruling: The Basics

• You need not be a resident of the Netherlands to benefit from the 30% ruling
• In fact, you do not even have to physically carry out work in the Netherlands in order to be eligible for it
• An explanation of the ruling can be found in the Dutch Wage Tax Act   
• The effect of this tax advantage is that your employer can pay you a tax-free allowance of up to 30% of your wage
• This extra allowance is intended for ‘extraterritorial expenses’
• Effectively, it reduces the rate of wage tax
• Since January 1, 2012 there have been several revisions to the conditions that accompany the 30%-ruling.
  In the following paragraphs, we will discuss the ins and outs of the most recent ruling. We will also discuss the transitional rules that now apply to those who were granted the 30%-ruling tax advantage on, or before, the changes took place.

Conditions for the 30% Ruling

There are certain conditions you must satisfy, in order to be eligible to benefit from the 30%-ruling in the Netherlands. The conditions are to do with the circumstances under which you begun your employment in Holland, as an ‘extraterritorial employee’.

The Dutch Tax authorities will examine the following matters:

1. How you Came to NL:

• You must have been either posted to the Netherlands from another country, or recruited to the Netherlands from abroad
• The Dutch tax authorities will also want to know the date on which you signed your employment contract

2. The Payroll you are on:

• For the ruling to apply to you, you must have a Dutch ‘withholding entity‘
• This means that your employer must deduct, or ‘withhold’, wage tax from your wages. If applicable, they must withhold general insurance contributions from your income as well
• In principle, this should include any salary you earn abroad, which is taxable in the Netherlands
• The money that your employer deducts must be paid to the Dutch tax authorities
• A non-Dutch employer can also act as a Dutch withholding entity

3. The ‘Scarcity’ of your Expertise:

• This condition will only be assessed in certain, exceptional cases, or if you are part of a group of employees that is brought to the Netherlands
• The condition is that you must have a specific area of expertise
• There must be a ‘scarcity’ of this line of expertise within the Dutch labor market
• This condition will normally be considered ‘met’, if you earn a minimum salary of €41,954, excluding the tax-free allowance of the 30%-ruling
  
• If you are under the age of 30 and you have a master’s degree, you will have a reduced salary threshold. You need only be earning €31,891, in order to meet the ‘expertise’ condition
• Academic scientists have no regulations pertaining to their salaries

4. Where you Lived before Moving to NL

• If you lived within 150km of the Dutch border for 16 of the 24-months before your activities in the Netherlands began, you are not entitled to benefit from the 30% ruling
• This can affect expats who come from, for instance, Belgium or Germany
• The rules for expats who were benefiting from the 30% ruling before January 1, 2012, are a little unclear. Therefore, we recommend you contact your tax advisor for advice, if this applies to you